Researchers at the University of Teesside who are studying age discrimination warn that companies should employ older workers now to safeguard their future.
Catherine McCauley-Smith, who is managing the Age and Attitudes research project, said: "Organisations must understand that this is a strategic issue to be looked at now, not tomorrow.
"As the pool of young people falls, it will become very competitive. Employers need to consider the benefits of employing older workers to retain corporate memory, bridge skills gaps and preserve organisational culture."
The project is funded by the European Social Fund and will explore the experience of age discrimination and its impact on small and medium-sized businesses in the Northeast. It will help employers rethink their attitudes to older staff.
"One of our aims is to set up a platform for other research to be conducted. People tend to assume ageism is about pensioners but the boundaries are drawing in. Old can now mean 45 plus," said Ms McCauley-Smith, a lecturer in organisational development.
New European legislation on age discrimination at work is due to be introduced by 2006, to encourage companies to take on a more diverse workforce. This is intended to counteract the economic implications of a falling birth rate, rising life expectancy and earlier retirement.
Patrick Grattan, chief executive of the Third Age Employment Network charity, said there had been a dramatic drop in working men aged over 50. Only two-thirds of this age group are employed in the UK.
"Companies are missing out by not using the talents of the older worker, and like all forms of discrimination, it is irrational," he said.
"Often the message is that older workers should retrain and get the qualifications needed to open the door on a new working life. But we find companies still won't look at them because of their age. In many cases, employment agencies act as a barrier."
Mr Grattan acknowledged that stereotypes remained of older workers being less adaptable and poor at handling technology. But the truth was that mature staff were better at customer service, adapted well to training and stayed longer in a job than younger colleagues.
"Some large companies are undoubtedly gaining from an age-diverse workforce that corresponds with their client group. There is evidence that sales are improved by older staff," he said.
"Small companies are less age conscious than big hierarchies where it can be seen as embarrassing to recruit someone older than you. But it makes sense to tap into this pool of under-utilised talent."
Details: SMEs employing 250 people or fewer and with an annual turnover of no more than £25 million can apply to take part in the research.
Email c.mccauley@ tees.ac.uk